Posts Tagged: ‘unsecured debt’

There are two main types of debt, these include: Secured debt and unsecured debt. Knowing the difference between the two can help you prioritize paying off your debts and keep your assets. Secured debts are tied to an asset that is considered collateral for that debt. Lenders place a lien on the asset, giving them the right to repossess it if you stop making payments on the loan. Examples of secured debt include a car loan and a home mortgage. A title loan is also a type of secured debt.

When it comes to unsecured debts, lenders do not have rights to any collateral for the debt. If you fall behind on payments or stop paying all together, the lender can generally not take any of your assets for the debt. The lender can take other actions against you to collect on the debt. For example, file a lawsuit against you and ask the court to garnish your wages. Unsecured debt can include credit card debt, student loans and medical bills.

So how do you know which debts to prioritize? Secured debts, those tied to a specific piece of property, are typically the best choice to pay first. These payments are often harder to catch up on if you fall behind and you risk losing essential assets, like your home or vehicle. Here are some ways bankruptcy can affect your debts– both secured and unsecured.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Although you may be receiving unwanted collections calls and falling behind on some bills, bankruptcy may not be the best option for you. There are certain types of debt which bankruptcy cannot erase. For example, back child support, alimony obligations, student loans and certain tax debts are non-dischargeable in bankruptcy.

Below are four reasons you should NOT file for bankruptcy:

1. You cannot make small payments on unsecured debt. Unsecured debt consists of most credit card debt and medical bills. In other words, it is debt that the lender has allowed you to run up without asking for a collateral in return. If you default on unsecured debt, the lender has nothing to repossess. Most consumers think that failing to make these payments will result in wage garnishment or other significant consequences. However, most lenders cannot take action unless they sue you. This can oftentimes be a lengthy process, providing you time to come up with the payments. If the amount you owe is small, the lender may write it off as uncollectable, rather than taking legal action. There are also options such as the negotiation of your interest rate or being placed on a realistic payment plan.

2. You want debt collectors to stop contacting you. The Fair Debt Collection Practices Act (FDCPA) requires debt collectors stop contacting you if you ask them. You must send the collection company a certified letter requesting this. After you have taken such action, it is against the law for the collection company to contact you, except to let you know they are either going to take legal action against you or stop their collection efforts.

3. Most of your debts are from recent income taxes, court judgments, child support payments or student loans. These are some of the debts that are oftentimes non-dischargeable in bankruptcy court. Filing for bankruptcy will not relieve you of these type debts.

4. You do not have any assets or income outside of Social Security, unemployment or welfare. Creditors cannot garnish your Social Security income, unemployment or welfare, even if they sue you. It is not necessary to file bankruptcy if you do not have an income that creditors can take or assets they can seize.

If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.